Invest in Cities with Crypto and “Access Properties Worldwide”

Investing in real-world assets (RWAs) using cryptocurrencies is a phenomenon that has been around for a while. In fact, people have been leveraging blockchain technology to tokenize a number of tangible assets, such as real estate, art, and even commodities.

However, the wide spread of crypto’s usage has also created a new concept of crypto cities – urban environments where blockchain technology is extensively integrated into various aspects of city management and daily life.

During COVID-19, the real estate market faced a lot of volatility, making it harder for people to speculate on the rising and falling of markets. This brought forth the idea for PARCL, a crypto company that lets investors get short and long exposure to cities and metros worldwide.

Where is this new concept headed next?

In this article, we explore how to invest in cities and neighborhoods with crypto and talk to experts about the future of crypto property investments.

Key Takeaways

  • Investing in real estate using cryptocurrency allows investors to diversify their portfolios by gaining fractional ownership of high-value properties.
  • The tokenization of real estate assets enhances liquidity and accessibility in the property market, breaking down barriers to entry.
  • The convergence of crypto and real estate has the potential to redefine both industries, creating a future that is more accessible, efficient, and ethical.

Emerging Trends in Crypto Property Investing

A recent trend among crypto communities holding Bitcoin (BTC) saw investors buying into property to diversify their portfolios, as opposed to just buying and selling crypto “for a quick buck,” Seamus Rocca, the CEO of Xapo Bank, told Techopedia.

Advertisements

Platforms such as Centrifuge and RealT have also emerged, building solutions to facilitate fractional ownership of properties and enhance accessibility to markets traditionally characterized by high barriers of entry.

Alex Malkov, the co-founder of HAQQ, noted that even more established entities like St. Regis Aspen Residences are exploring tokenization options, indicating a broader trend toward increased liquidity and democratized access.

Bringing liquidity to the largest asset class in the world, residential real estate, which is initially highly illiquid, is an important factor when it comes to investing in property using cryptocurrency, PARCL co-founder and CEO Trevor Bacon told Techopedia.

Explaining how PARCL works, Bacon noted that while the concept may be new, it is fairly simple:

“You can go long (bet on) or short (bet against) real estate markets with up to 10x leverage. For example, if you think Miami Beach will rise in value over the course of the month, or year, you would place a long position. Blockchain is an enabler of the product as it is used to facilitate the transactions of value and maintain the exchange.”

Another emerging trend is the integration of decentralized finance (DeFi) protocols with tokenized real estate, presenting innovative avenues for investors.

Projects like UMA and MakerDAO are pioneering concepts like earning rental income through DeFi models as opposed to the more conventional rental leases, HAQQ’s Malkov noted.

Bringing More Exposure to Real Estate

Because of crypto assets like BTC, a lot of investors had managed to break into the property market thanks to the cryptocurrency’s growth appreciation, Xapo Bank’s Rocca noted.

“There is no other asset out there that has the growth appreciation Bitcoin has had over the last 5 years and it is helping people break into the property market where had they not had Bitcoin, they would more than likely have been priced out of the property market.”

In addition, Rocca stated that BTC’s role as a hedge against currency devaluation and a store of value has allowed property investors to break into the property market with much more ease than previously expected.

“This doesn’t work short term given the price of Bitcoin is volatile, but for those investors who have a 5-year view, Bitcoin is a great store of value in which to invest and expect similar levels of capital appreciation to what we have historically seen in property over the last few decades.”

PARCL’s Bacon agreed, noting that the initiative provides a lot of new ways for people to gain exposure to real estate, a more traditionally inaccessible yet desirable asset class. He added:

  • If someone owns a home and desires to protect their home equity, they could go short on PARCL.
  • If they rented and wanted to own a home but did not have enough money for a down payment or were uncertain about timing, they could go long on PARCL.
  • Moreover, cryptocurrencies allow people to invest internationally, meaning they do not have to be physically present in the country where they wish to invest in real estate.

HAQQ’s Malkov noted:

“Cryptocurrency’s borderless nature is globalizing the real estate market, enabling investors to access properties worldwide from the comfort of their homes. Whether it’s owning a piece of Parisian elegance or a Californian retreat, the possibilities for diversification and higher returns are expanded through secure and transparent platforms.”

Does Investing in Cities Create a More Accessible Future?

The convergence of crypto and real estate has the potential to redefine both industries, creating a future that is more accessible, efficient, and ethical, according to HAQQ’s Malkov.

Democratizing Real Estate Ownership

“Firstly, tokenization is democratizing real estate ownership by granting individuals of all financial backgrounds the opportunity to invest in high-value properties,” Malkov said.

“You can see this with platforms like Centrifuge and RealT, coupled with HAQQ’s commitment to Sharia-compliant solutions. Barriers to entry are being dismantled, allowing wider participation in what was once an exclusive market.”

Streamlining Real Estate Transactions

In addition, blockchain technology is already used to streamline real estate transactions by removing cumbersome paperwork and other intermediaries.

That, coupled with blockchain’s inherent transparency, also helps reinforce trust by providing immutable records of ownership and transactions, mitigating fraud, and promoting accountability within the market.

Legitimizing the Crypto Industry

Moreover, investments like this can also help legitimize the crypto industry, according to David Kemmerer, the CEO of CoinLedger.

“Investments like this can help legitimize crypto as a currency, and major industries like real estate can only benefit from a greater number and variety of investors and investment types,” he said.

On the other hand, however, Xapo Bank’s Rocca noted that the phenomenon of investing in real estate using crypto could be a generational thing.

He told Techopedia:

“Generation X used to dream of buying and owning a property as a form of investment and store of value or passive income heading into retirement. I think millennials and Generation Z are more likely to look towards Bitcoin as a long-term investment asset that helps store wealth and gain capital appreciation. You can buy a fraction of a bitcoin, remember, but you can’t buy a fraction of a house. If property prices are out of reach, Bitcoin is a good alternative.”

The Bottom Line

Investing in cities and neighborhoods using cryptocurrency presents a novel opportunity to diversify portfolios and gain exposure to traditionally inaccessible real estate markets.

The emergence of platforms like PARCL, Centrifuge, and RealT enable fractional ownership of properties, increasing liquidity and democratizing access for investors worldwide.

Through the use of blockchain technology, these initiatives streamline transactions and remove intermediaries, potentially redefining both the crypto and real estate industries.

Advertisements

Related Reading

Related Terms

Advertisements
Iliana Mavrou
Crypto journalist

Iliana is an experienced crypto/tech journalist reporting on blockchain, regulation, DeFi, and Web3 industries. Before joining Techopedia, she contributed to a number of online publications, including Capital.com, Cryptonews, and Business2Community, among others. In addition to working in journalism, she also has experience in tech and crypto PR.  Iliana graduated from the City University of London with a degree in Journalism in 2021. She is currently pursuing a Master's degree in Communication.